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March 5, 2025
The National Labor Relations Board’s (NLRB) priorities are shifting. On February 14, 2025, NLRB Acting General Counsel William Cowen issued a Memorandum (GC 25-05) to all NLRB field offices, signaling the priorities of the new political administration and rescinding (either entirely or pending further guidance) more than 30 Memoranda that former NLRB General Counsel Jennifer Abruzzo issued from 2021 to 2024. GC 25-05 appears to be the NLRB’s effort to prioritize efficiency and efforts to get through the backlog of cases already before the Board. Per Cowen, “[t]he unfortunate truth is that if we attempt to accomplish everything, we risk accomplishing nothing.”
A complete list of the rescinded memoranda can be accessed on the NLRB’s News and Publications page.
Among the Memoranda rescinded is the recently promulgated GC 25-01, titled “Remedying the Harmful Effects of Non-Compete and ‘Stay-or-Pay’ Provisions that Violate the National Labor Relations Act.” GC 25-01, dated October 7, 2024, followed an earlier Memorandum (GC 23-08) that Abruzzo issued in May 2023, where Abruzzo asserted that most non-compete provisions violate the National Labor Relations Act. See our article about GC 23-08 here. (GC 23-08 also has been rescinded by Cowen’s February 14, 2025 Memorandum).
GC 25-01 expanded GC 23-08 to include forfeiture for competition clauses, training cost agreements, tuition repayment policies, apprenticeship programs, clawback provisions, and a myriad of other arrangements that Abruzzo termed “stay-or-pay” provisions. Seen as a carrot or incentive to convince employees to remain with a company for a period of time, “stay-or-pay” provisions have become widely used as an alternative to “true” non-compete provisions, which simply restrict employees from joining a competitor.
GC-25-01 provoked anxiety among some employers because of the expansive interpretation of what constitutes a “non-compete” and because it instructed field officers to impose harsh penalties against employers who used these types of “stay-or-pay” provisions in the past, even if they never sought to enforce them.
Although somewhat expected, the rescission of GC 25-01 is significant for at least two reasons. First, for those employers who cancelled benefit programs or rushed to remove forfeiture and repayment provisions from contracts in 2024, the good news is that these measures are back on the table as retention tools. “Stay-or-pay” provisions can benefit employers, who can recoup some of the expenses of training employees who jumped ship to join the competition before the employer reaped the benefits of the expenditure, and they can benefit employees by allowing them to better measure and weigh the cost of leaving, without running the risk of ending up unemployable for a period of time.
Second, the rescission of GC 25-01 and GC 23-08 echoes and probably signals the final death knell of the federal government’s efforts to curtail non-competition agreements on a global scale across the NLRB and other administrative agencies. Along with the NLRB policy memoranda rescissions, the Federal Trade Commission’s (FTC) widely discussed and hotly contested “Non-Compete Ban” is, by all accounts, likely dead. As previously reported, the FTC Non-Compete Ban was set to take effect September 4, 2024 before being struck down by U.S. District Court Judge Ada M. Brown (Northern District of Texas). Read our articles about the proposed ban here, here, and here.
Last September, the FTC appealed Judge Brown’s decision to the U.S. Court of Appeals for the Fifth Circuit (Docket #24-10951) and contemporaneously filed an appeal in the U.S. Court of Appeals for the Eleventh Circuit (Docket #24-13102), seeking to overturn a more limited injunction issued by U.S. District Court Judge Timothy Corrigan (Middle District of Florida). In the Fifth Circuit appeal, the FTC filed its brief on January 2, 2025; the Appellee (Ryan LLC) filed its Response on January 23, 2025, and the FTC secured an extension of time to file its Reply by March 26, 2025.
In the Eleventh Circuit appeal, the FTC filed its brief on November 4, 2024; the Appellee (Properties of the Villages) filed its Response on January 15, 2025, and the FTC secured an extension of time to file a Reply by March 7, 2025.
Given the recent appointment of Andrew Ferguson as FTC Chairman, and Ferguson’s previous opposition to the Non-Compete Ban, it appears highly unlikely that the FTC will submit Reply briefs or otherwise pursue these appeals.
This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice. Always consult an attorney with specific legal issues.
